On one hand the Deputy Minister of Mines and Mining Development, Polite Kambamura, believes there are large-scale gold miners who have been under declaring their production, in order to sell it through the small-scale miners.

On the other hand, Reserve Bank of Zimbabwe governor John Mangudya, believes mining in Zimbabwe has overtaken agriculture as the anchor of the country’s economy – thanks to its successful mining sector.

Mangudya’s reasoning lies in the mining sector’s strong performance being underpinned by record gold output as well as impressive figures from Zimplats.

He has stated that the politically battered and economically crippled country has earned $2.2 billion from its mining sector.

Who do you think has a more correct view of the mining sector in Zimbabwe?

2 COMMENTS

Richard,
John Mangadya, Reserve Bank Governor will be most likely to be correct. Having worked in Zim in the mid 1990’s until 2002 and having been on the board of Zimplats, I found the RBGs at that time well informed and direct. I don’t see why this would be any different now.

We deal with the largest single gold mine in Zim and know with a high degree of certainty that they have not sold any of their gold through small scale miners. There was some discussion around doing this due to the fact that small scale miners were receiving approx. 60% of their sales value in hard currency while the large scale miners were struggling to obtain adequate foreign currency through the central bank – they were advised that going via other registered gold buyers was not an option and the idea was parked.

The points of view raised may now however be redundant as recent monetary policy statements have made way for gold miners to receive firstly 30% of their earnings and subsequently 55% of their earnings in hard currency, to be held in a company Nostro account, and available for use by each mine, in line with the central bank requirements for making payments to external suppliers. While this does not address the need for lump sum capital requirements it will go a long way to reinvigorating gold production from larger scale miners.

The previous arrangement may have seen gold from outside of the country’s borders being sold via the small scale miner route (and therefore inflating small scale mining figures), but this is merely speculation and when analysing the detail, it is probably not practical.

Mining as a whole does appear to be on the up but profits remain under threat due to general metal prices. There has been a much improved level of dialogue between Ministers, the Central Bank and the mining industry, and from that point of view, the operating environment is more positive. There is a definite willingness to attract/accommodate investment (mining and generally) and those that can see past the disastrous policies of the previous administration will find good returns. The country wide shortage of foreign currency will however continue to challenge any business operating in Zim, but improved earnings from mining will assist.